2025 ETF trends: What’s next for ETFs? 3 ETF trends taking the industry by storm
ETFs represent roughly 18% of global investable assets.1 We believe wider adoption, new use cases, and more innovative products will continue to drive growth.
Since State Street Investment Management launched the first US-listed ETF more than 30 years ago, the global ETF market has expanded across demographics, strategies, asset classes, and everything in between. ETFs have gathered assets at an impressive cumulative annualized growth rate of 20.1% since 2008,2 reaching $13.8 trillion assets under management (AUM) at the end of 2024.3
And as this exponential growth continues, so does investors’ satisfaction. According to our 2025 ETFs in Focus Study, 65% of US investors with $250k+ in investable assets say that ETFs have improved the overall performance of their portfolios—up 6% since the end of 2022.4
As ETF growth and satisfaction boom, what’s next for ETFs—in 2025 and beyond? Here are three trends we’re watching closely:
1. Alternatives are going mainstream
Modern Portfolio Theory of the 1950s paved the way for the 60/40 portfolio to reign supreme for years as one of the most universally recognized allocation models in investment management: equities for growth, bonds for stability. But by the end of March 2025, stocks and bonds had exhibited positive correlation for more than 700 days.5
Figure 1: Correlation and concentration challenge the 60/40 portfolio
Days of rolling positive correlation across stocks and bonds 6
Stocks account for 33.6% of US S&P 500® market cap 7
In turn, flows into alternatives has grown—increasingly becoming part of investors’ core portfolios versus just a “sleeve” to supplement the core.
But what exactly are alternative investments? Broadly speaking, they refer to the investment possibilities outside the traditional choices. And right now, they can be categorized into two primary categories:
Figure 2: Alternative investment vs. alternative strategies
| Alternative investments | Alternative strategies |
| Assets that don’t fall into traditional equity and fixed income classes, including a wide variety of things you interact with almost every day as well as “non-traditional” investments. | Strategies that don’t focus on traditional buy-and-hold investing or any certain asset classes, but rather, focus on the investment approach to achieve a certain outcome. |
| Examples: · Commodities · Real estate · Infrastructure investments · Gold · Hedge fund strategies · Private credit and equity · Digital assets |
Examples: · Defined-outcome ETFs (also known as buffer ETFs) help cushion volatility and target predefined ranges of return · Derivative income ETFs seek to generate income through the use of derivatives |
Once considered niche, alternative assets and strategies have fast become less “alternative” as investors continue to look to diversify portfolios of stocks and bonds with less correlated asset classes to help manage risk and seek new return streams.
Where is alternative demand going?
Certain themes that have caught investors’ attention include:
- Digital assets and transformative tech for next-gen innovation exposure
- Gold and other commodities for hedging, diversification, and appreciation
Structured outcome-driven ETFs to help manage equity risk while still pursuing upside potential
As new products continue to modernize the alternatives market, ETFs are playing a key role in democratizing access to these once hard-to-access opportunities—a role that could continue to grow.
“With capital market volatility likely to remain elevated, I’m encouraging investors to consider safe havens like gold, defensive sectors, services versus goods, dividend growers with stable earnings, and alternatives to traditional 60/40 portfolio allocations.”
2. Active ETFs: Picking up the pace
The world changes quickly, and so do markets. That means investors need tools that can help them adjust to unpredictable twists and turns. Active ETFs offer that real-time adaptability, helping investors position for a variety of outcomes.
In our 2024 ETF Impact Survey, US advisors identified active as the ETF trend that would have the most significant impact on the global ETF market through 2025—and they’re well on their way to being right. After securing a record $166 billion in global inflows in 2023, active ETFs captured $330.7 billion in 2024—22.24% of all ETF inflows globally.
Investors have historically associated “active” with “alpha,” but the rise in actively managed ETFs has also been fueled by a wide variety of investor goals—pursuing specific outcomes, mitigating risk, adapting to changing market conditions, seeking to achieve a defined outcome, and more.
And fortunately, the robust menu of active ETFs offers something for nearly every investor, from active equity, active fixed income, and more. For example:
- Active fixed income ETFs enable investors to construct potentially more resilient bond portfolios that seek to respond to changing macro, credit, and rate trends by allocating to fixed income in more flexible and dynamic ways.
- Buffered ETFs have gained traction as more investors seek downside protection while still pursuing upside potential.
- Options-based strategies are enabling investors to pursue enhanced income potential.
- Thematic growth strategies are helping investors tap into the potential of innovation while managing the fundamental and macro risks involved.
Factors driving this growth include increased product innovation, the continued migration of assets from mutual funds to the ETF wrapper, and budding investor demand internationally.
What else are we predicting for the growing ETF market?
Explore top trends and bold predictions for the future in our latest ETF Impact Report.
Outside the US, growth is especially rapid. In Asia-Pacific, regulatory shifts and growing investor demand have helped expand active ETFs from $38.75 billion to $51.63 billion in AUM, representing nearly 6% of the regional ETF market. Notably, active fixed income ETFs surged 33% in 2024, while active equity ETFs climbed 67%.8 And in Europe, active ETFs grew from $38 billion to $55.7 billion.9
As investors seek cost-efficiency, specialized strategies, and cost-efficiency, active ETFs could continue to lead the way.
“Unlike passive strategies, a risk-controlled active approach combines broad market exposure with added flexibility to adapt to changing market conditions.”
3. All about AI, crypto, and digital disruption
The thought of AI may conjure up images of large data centers, with seemingly miles and miles of server racks and storage systems, all humming away. And in the last couple years, you probably think of that large language model on your phone—ChatGPT, Claude, Perplexity, etc.—that you ask for recipes, advice on how to handle an awkward work situation, or why your refrigerator is making that weird noise.
Although AI is impacting lives now—from the largest company to everyday people—its potential arguably has yet to be fully realized. But AI investment opportunities extend across the entire value chain: both, across the companies creating the building blocks for AI development and the companies adopting AI to drive greater efficiency and broader technological innovation.
Similarly, the digital assets ecosystem has seen impressive growth. Although digital assets are still a relatively youthful asset class, crypto market capitalization rose nearly 966% between August 2019 and March 2025.10
Figure 5: Digital asset-related ETF AUM levels (Global, APAC, EMEA)
Global crypto ETF AUM 11
APAC digital asset ETF AUM 12
EMEA digital asset ETF AUM 13
Many investors are approaching digital assets cautiously, but advancements in tokenization, an improving regulatory outlook, and increased access to diversified crypto-related exposures creating a sense of ease to investing. In turn, 2024 was a year of momentum for digital asset ETFs. That momentum could continue amid developing (but favorable) regulatory frameworks, heightening institutional interest, and growing global appetite for digital assets.
From a portfolio perspective, more investors are incorporating digital assets as sources of potentially uncorrelated returns and as diversifiers to access the industry’s long-term growth potential.
Figure 6: Bitcoin exhibits relatively low correlations to stocks, bonds, and real estate
Bitcoin/S&P 500® correlation 14
Bitcoin/US Aggregate correlation 15
Bitcoin/US REITs correlation 16
Like AI, the full potential and value-creation opportunities of digital assets, blockchain, and other enabling technologies are still unfolding. And the crypto asset value chain now spans infrastructure, payments, smart contracts, and various other technologies. These technologies could shape the future of how we make transactions, exchange value, and improve security in finance.
As the market expands, instead of thinking only about coins, investors may want to consider the massive ecosystem that enables the digital asset ecosystem—the miners, exchanges, tech providers, crypto services, fintech go-getters, and blockchain innovators.
“The Trump administration has committed to digital asset regulatory clarity and is in support of the broader ecosystem’s growth. As a result, digital assets and blockchain technology are expanding investors’ asset allocation toolkit and becoming integral to the future of finance. So too are digital asset exposures.”
Get more top trends and bold predictions
Uncover the top ETF trends and innovative strategies helping investors adapt to new terrain and build resilience for the future inside our latest ETF Impact Report.